Author: Site Staff

The growth in health care costs paid by employers is expected to level off in 2009 after five years of deceleration, a report from PricewaterhouseCoopers’ Health Research Institute predicts.

Based on a survey of more than 500 employer and health plans providing coverage to 11 million lives, New York-based PricewaterhouseCoopers found that medical costs will increase by 9.6 percent on average next year, compared with an average of 9.9 percent this year.

Improved medical management and a focus on prevention and wellness are among the tools that employers are using to slow down the growth in health care costs, according to the report, “Behind the Numbers: Medical Cost Trends for 2009,” which was released Thursday, July 24.

Two-thirds of employers contract with disease management programs that focus on reducing and eliminating hospitalization, the report found. In addition, two-thirds of employers have adopted wellness programs, nearly half of which say they are somewhat effective at reducing costs.

Generic substitution of prescription drugs also continues to reduce health care costs for employers, according to the PricewaterhouseCoopers report. However, this benefit is likely to diminish, since fewer brand-name drugs are going off patent in 2009, the researchers said.

Although the rate of increase in health care costs is being tempered somewhat, PricewaterhouseCoopers found that two major factors continue to contribute to employers’ growing medical tab: new construction in the health care industry and cost-shifting from the uninsured.

In particular, the health care industry is in an era of booming construction in response to increasing consumer demand, PricewaterhouseCoopers reported. Moreover, if there is a recession in 2009, the health care industry could grow even more. During previous recessionary periods, health care has increased its portion of the gross domestic product and medical prices have risen faster than other prices, PricewaterhouseCoopers said.

In addition, one of every four dollars spent by private payers is making up for decreasing government financing to Medicare and Medicaid, the report found.

A copy of the complete report can be found at www.pwc.com.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

A suicide sufficiently connected to an industrial injury is compensable under Nevada’s workers’ compensation system, the state’s highest court has ruled.

State law barring family members from collecting workers’ comp benefits if a worker’s death resulted from a “willful intention to injure himself” does not apply when a “sufficient chain of causation is established,” the Nevada Supreme Court ruled in Sharon Vredenburg v. Sedgwick CMA and Flamingo Hilton-Laughlin.

To establish such a chain, claimants must demonstrate that the employee suffered an industrial injury that in turn caused a psychological injury severe enough to override rational judgment. Claimants must then establish that the psychological injury caused the employee to commit suicide, the court said.

The decision stems from a back injury that Danny Vredenburg, a bartender, suffered from slipping on a flight of stairs, causing disc derangement in several locations along his spine, court records show. Despite surgery and the use of pain medications and anti-inflammatory agents, he continued to experience pain.

A doctor diagnosed Vredenburg as psychologically destabilized because of his chronic pain and recommended that he claim permanent disability status. When Vredenburg killed himself, a second doctor opined that Vredenburg did so because of the unrelenting pain, and his spouse then filed for death benefits.

But the insurance administrator for Vredenburg’s employer ruled that the doctor’s opinion lacked a medical rationale linking the suicide to his industrial injury and denied the claim.

A workers’ comp appeals officer agreed, and a district court denied the claimant’s petition for judicial review. But the Nevada Supreme Court reversed and remanded the case for proceedings consistent with its opinion.

Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

After 11 years, a bill that would increase penalties for pay discrimination against women could soon be on the floor of the House of Representatives.

On Thursday, July 24, the House Education and Labor Committee approved the Paycheck Fairness Act on a party-line vote, 26-17. The bill updates a mid-1960s law that prohibits wage disparities between men and women performing the same job.

The measure would put gender discrimination on par with racial discrimination in terms of remedies by allowing women to sue for punitive and compensatory damages.

“If we are serious about closing the gender pay gap, we must get serious about punishing those who would otherwise scoff at the weak sanctions under current law,” said Rep. George Miller, D-California and chairman of the committee. He cited Census Bureau statistics that show women make 77 cents for every dollar earned by a man.

Under the bill, a company that pays women at a different rate than men would have to prove that the practice is based on a business necessity.

The measure would permit workers to share pay information and prohibit employers from banning such discussions from the office. It also would establish Department of Labor grants for “negotiation skills training programs for girls and women.”

Republicans criticized the bill, saying it was unnecessary because the Equal Pay Act of 1963 already makes wage discrimination illegal. They asserted that the bill would increase litigation costs and undermine recruiting and hiring.

“What we’re really debating here today is whether it should be easier for trial lawyers to cash in under the Equal Pay Act, and whether it should be more difficult for employers to make legitimate employment decisions based on factors other than sex,” said Rep. Howard “Buck” McKeon, R-California and the ranking member of the labor committee.

Republicans kept the bill bottled up while they controlled the House. It was in the hopper for a decade before finally getting a hearing, which didn’t occur until Democrats captured the majority last year.

Now it could be speeding along. The bill’s author, Rep. Rosa DeLauro, D-Connecticut, said it could be placed on the House calendar for a vote as early as the week of July 28.

“This is the thrill of a lifetime,” she said in an interview after the labor committee action.

The full House will almost certainly approve the bill, which has 230 co-sponsors. But the Senate companion bill is unlikely to make it through the legislative process this year.

Nonetheless, a House vote would help Democrats politically. Battling pay disparity is an issue that the party believes is one of its strong suits, especially as the economy falters.

Polls show presumptive Democratic presidential nominee Sen. Barack Obama leading Republican rival Sen. John McCain by a substantial margin among women.

“There is a sense of economic insecurity for women,” DeLauro said. “It’s palpable nationwide.”

Before the final labor committee vote on the bill, Republicans offered an amendment that framed wage worries in a different way, linking them to rising gas prices. It would have directed the Bureau of Labor Statistics to conduct a study on “the increase in the price of gasoline to unprecedented levels … and the effect of such an increase on the income of women workers.”

That amendment and one that would allow employees to take compensatory time off in lieu of overtime pay were denied a vote because Democrats said they were not related to the underlying bill.

—Mark Schoeff Jr.

Employers with 401(k) and other participant-directed individual account plans would have to disclose the fees and expenses of the investment options offered by the plans under rules proposed Tuesday, July 22, by the Labor Department.

Additionally, employers would have to disclose past-performance data on investment options, comparable benchmark returns and a Web address for each investment option.

Employers also would have to provide a description of fees and expenses charged to participants for plan administrative services, such as legal and accounting, as well as how those charges will be allocated to their individual accounts.

A description of charges for specific services provided to a participant, such as for processing loans, also would have to be provided.

Generally, the disclosures would have to be provided when an employee becomes eligible to participate in the plan and annually thereafter.

The owner of a downtown Los Angeles sushi restaurant facing wage payment claims by two alleged undocumented workers has launched a novel counterattack by filing a class-action lawsuit against the California labor commissioner for defying federal immigration law.

Masayoshi Kaji of Sushi Sharin argues that the commissioner’s policy of providing undocumented workers with an administrative forum in which to litigate wage claims and awarding them wages violates the Immigration Reform and Control Act. His attorney believes the case is one of first impression.

“The immigration policy of the United States is that people who are here illegally can’t work and should not be awarded wages,” says Ernest J. Franceschi of Los Angeles.

In April, the commissioner awarded Kaji’s two former employees—brothers Tranquilino Cruz Garcia and Rutilino Cruz Garcia—more than $35,000 in back wages plus penalties. The award covers unpaid overtime, missed rest periods and missed meal periods between February 2005 and December 2007.

The class action, filed in May, seeks an injunction against the commissioner on behalf of Kaji and “all California employers who are presently subject to or in the future may be subject to an administrative action before the California labor commissioner in which an award of wages is sought by a person not illegally authorized to work in the United States.”

Franceschi cites the precedent of Hoffman Plastics Compounds v. National Labor Relations Board, in which the U.S. Supreme Court overturned an award of back pay to an undocumented alien who sued an employer for violations of the National Labor Relations Act. “[A]warding back pay to illegal aliens runs counter to policies underlying IRCA, policies the board has no authority to enforce or administer,” it concluded.

Kaji also has requested a court order requiring the Cruz Garcias to reimburse him for all wages they received from him.

“I don’t really see any distinction” between Hoffman Plastics and Kaji’s case, Franceschi says.

But California Labor Code Section 1171.5 provides that “All protections, rights, and remedies available under state law … are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.”

According to Gladys Limon, an attorney with the Mexican American Legal Defense and Educational Fund who is representing the Cruz Garcias, Hoffman Plastics was a narrow ruling that has not been extended to state labor laws.

“One of the objectives of IRCA is to deter employers from hiring illegal workers,” she argues. “Enforcing wage and hour laws against employers who are exploiting illegal workers [achieves] the purposes of IRCA.”

Federal courts, moreover, have distinguished Hoffman, which applied to back pay for work that had not been performed, from cases involving awards for work actually performed.

“Nothing in Hoffman suggests that IRCA mandates that undocumented workers forfeit payments for work that they have already performed or that, by hiring undocumented workers, employers may evade their legal obligation to make wage payments for work that has actually been performed,” the New York state Attorney General’s Office has said in an advisory opinion.

In Franceschi’s view, that distinction is “without substance” when the worker’s act of working is illegal. “The Cruz Garcias were not allowed to be here, they were not allowed to work here,” he says. Therefore, the labor commissioner “has no jurisdiction … to give them wages, no matter how they are classified.”

—Matthew J. Heller

Legislation that would set standards for a national health care information technology network got a major boost from a House committee on Wednesday, July 23. But its prospects for making it all the way to the president’s desk remain cloudy.

One of the goals of the bill, passed by a voice vote of the House Energy and Commerce Committee, is for every American to have an electronic health record by 2014. Supporters say that greater use of such technology will sharply reduce medical costs while improving the quality of care.

Unanimous approval by the House committee represents a significant achievement for a bill that has had to overcome much resistance. Patient advocates and interest groups have raised fears about privacy violations related to the electronic sharing of medical information.

Under the bill, an individual would have to be notified whenever their health information is compromised. Other provisions prohibit the sale of protected health information and give patients greater control over the use of their records.

A smiling Rep. John Dingell, chairman of the House Energy and Commerce Committee, was happy to see the bill sail through the committee after years of work on the issue.

“We have squeezed all the controversy out of it,” he told reporters after the panel vote. But the bill has not overcome all the obstacles in its path to the House floor.

The House Ways & Means Committee also has jurisdiction over the privacy provisions of the bill and could offer its own legislation. A subcommittee is scheduled to hold a hearing on health information technology Thursday, July 24.

Beyond potential Ways & Means action, further negotiations remain on the House commerce bill. During the Wednesday, July 23, markup, several members of the committee expressed continuing concerns about privacy—from those who thought the bill didn’t go far enough and from members who worried that restrictive legislative language would discourage providers from implementing medical information technology.

Dingell assured his colleagues that he would work with them as the legislation moves on. The bill represents “a delicate balance between promoting and encouraging the electronic flow of health information and protecting that information from those who should not have it,” he said.

Now the bill must compete for time on a quickly dwindling congressional calendar. After a House vote occurs, negotiations with the Senate loom.

Both the Senate and House versions would make permanent the Office of the National Coordinator of Health Information Technology within the Department of Health and Human Services.

Originally created by a presidential executive order, the office would guide the development and adoption of health IT. In the Senate bill, a public-private partnership would make recommendations to HHS on interoperability and voluntary standards. The House bill would establish federal advisory committees.

The House and Senate bills also provide incentives for doctors and hospitals to buy health information technology. The House funding is $560 million, which is targeted mostly at small and rural providers. The House’s privacy protections are stronger than the Senate’s.

As is the case with all compromise legislation, no one is happy with every aspect of the bill. But Republicans and Democrats both urged their colleagues not seek major changes.

“We shouldn’t let the pursuit of the perfect be the enemy of the good,” said Rep. Joe Barton, R-Texas and the highest-ranking Republican on the House commerce committee. “I truly believe that it will change the way health care is practiced in America for decades to come.”

A leading Democrat on the committee stressed that tinkering with the bill could be fatal at this stage of the process.

“One step in another direction could cause us to fall off course,” said Rep. Frank Pallone, D-New Jersey.

Health care technology advocates are urging Congress to get the bill done this year.

“America can’t afford coverage for all, if we don’t have health IT,” former Rep. Nancy Johnson, R-Connecticut and co-chair of the Health IT Now Coalition, said last month. “We must push the ball over the line this session or we will pay dearly.”

—Mark Schoeff Jr.

More than 3 million people are enrolled in frozen single-employer defined-benefit plans, according to a new GAO report.

The most common reasons executives gave for freezing their plans included the impact of annual contributions on their firm’s cash flows and the unpredictability of plan funding, according to the Government Accountability Office.

Among pension plans surveyed, 23 percent involved a hard freeze, in which all future benefit accruals cease. Twenty-two percent involved a partial freeze.

Also, 83 percent of the companies with frozen plans offered alternative retirement savings arrangements.

“As businesses struggle in this economy to pony up more money than they’ve ever had to contribute before because of the [Pension Protection Act’s] stiffer funding requirements, I fear that the spike in pension freezes will rise even more,” Rep. Earl Pomeroy, D-North Dakota, who was among legislators who requested the GAO report, said in a news release. “Some argue that higher funding would be good for workers, but there is a hitch — private-sector pensions are voluntary.”

The GAO received responses from 48 DB plan officials of the 471 executives contacted.

This story was filed by Jennifer Byrd of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

In its latest effort to go digital, the New York Times Co. on Tuesday, July 22, announced a joint venture with networking site LinkedIn that aims to boost features available on NYTimes.com.

Under the partnership, LinkedIn members who visit the business or technology sections of The New York Times’ Web site will see a series of headlines tailored to aspects of their LinkedIn profile, including their industry of employment and job title. Advertisements on the Times’ page will be similarly tailored, factoring in LinkedIn profile information that includes seniority, company size, gender and geography. Readers are able to opt out of the ad service.

The changes won’t affect the Times’ home page.

“Working with LinkedIn, we have created a program that will provide readers with a more relevant and customized experience,” said Vivian Schiller, general manager of NYTimes.com, in a statement. “This relationship will further our engagement with our large audience of professionals, executive decision makers and small-business employees.”

NYTimes.com had 17.7 million unique visitors in June, according to Nielsen Online.

The deal marks the latest pairing of media outlets and networking Web sites. Monster Worldwide, a national provider of online job and recruiting services, last month announced the launch of co-branded recruitment sites with more than a dozen regional newspapers, including The Columbus Dispatch and the San Francisco Examiner. New York-based Monster also has a content agreement with cable network MSNBC.

Online headhunters and job sites continue to prosper, even in the face of a struggling economy and plunging classified ads at their print counterparts.

Filed by Kira Bindrim of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Most employers have run on the assumption that the more benefits they offered to employees, the happier their workers would be.

But in light of increasing health care costs and shrinking profit margins, a growing number of companies are rethinking that assumption. As a result, employers are surveying employees to discover what trade-offs in benefits and compensation they would be willing to make.

There is increasing pressure on HR executives and benefits managers to prove to CEOs and CFOs that the money they are spending on benefits is worth it, says Tim Glowa, a consultant with Hewitt Associates.

“Benefits costs are about to eclipse profits at many Fortune 500 companies,” Glowa says.

At the same time, companies are starting to realize that in many cases, there is a huge gap between how much employees value certain benefits and the amount of money companies spend on those benefits, he says.

Hewitt estimates that typically $1,200 is spent per employee on undervalued benefits. The Lincolnshire, Illinois-based consulting firm, which has an online tool for clients to help survey employees, has seen interest in its product double every year for the past five years, Glowa says.

American Express is among the companies surveying for potential trade-offs. The New York-based company has conducted employee engagement surveys but noticed that compared with other areas, the company received lower rankings on compensation issues, says Timothy Nice, vice president of compensation at American Express.

“The questions we were asking were too general,” Nice says.

For example, employees may indicate they want more compensation, but not what kinds of compensation they prefer. “So we decided to dig in deeper and see what employees wanted,” Nice says.

American Express is surveying employees in the U.S., the U.K., Australia, Spain and Mexico, asking whether they prefer restricted stock or cash bonuses, Nice says.

Companies asking employees about trade-offs need to be prepared to make changes to their benefits and compensation plans to accommodate employees’ preferences, says Steven Gross, worldwide partner at Mercer.

“You are creating the expectation that you are going to change something,” he says.

The next step could be that employers will take their set allocation of money for benefits and allow employees to choose which ones they want, Glowa says.

This could save employers a large sum of money in benefits expenditures, says Neil Crawford, a consultant at Hewitt Associates.

The money could be spent on HR services such as training, which actually contributes to greater productivity among employees, he says.

“It’s about using your budgets more effectively and giving employees what they want,” he says.

—Jessica Marquez

Ford Motor Co. is extending another round of buyout offers to its hourly workers at more than a dozen U.S. plants as the company aligns production with weakening demand.

The company said Monday, July 21, that it would start making plant-by-plant offers on Monday, July 28, to workers at sites in Michigan and Ohio.

In the fall, the buyout program will expand to include staggered offers to employees at other locations, such as Louisville, Kentucky, said Ford spokeswoman Angie Kozleski.
 
The targeted plants will include truck and SUV plants in which Ford has cut shifts or those it has shut down temporarily.

In June, Ford made buyout offers to some of its hourly workers at Kentucky and Ohio plants.

The company plans to retool some of its U.S. plants to produce small cars, The Wall Street Journal reported on Saturday, July 19. Ford is scheduled to release second-quarter financial results Thursday, July 24.

In April, Ford said it fell short of meeting a buyout target for U.S. hourly jobs in a companywide offer made earlier this year. Ford said 4,200 workers had signed up for buyouts, but it had sought about 8,000.

Ford is offering buyouts to hourly workers at the following plants:

• The Kentucky truck plant in Louisville, which makes F-series Super Duty trucks.

• The Louisville plant that assembles the Ford Explorer and Mercury Mountaineer SUVs.

• The Michigan truck plant in Wayne, which makes the Ford Expedition and Lincoln Navigator SUVs.

• The Wayne assembly plant, which makes the Ford Focus small car.

• The Ohio assembly plant in Avon Lake, which makes Ford’s E-series vans.

• The Dearborn, Michigan, truck plant, which makes the Ford F-150 and the Lincoln Mark LT.

Filed by Craig Trudell of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.